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I just formed a LLC for my new business and I would need capital to start my import/export business, I need to know how can I acquire loans for my new business since I do not have any collateral and I would like to know if my personal debt such as student loans or credit card debt would count against my credit line for my business or it is separate?

Thank you.

Asked on 5/15/08, 12:31 am

3 Answers from Attorneys

In general, however, just because you formed an LLC (by the way, did you consider an S corp. instead?) isn't going to open up many new avenues of credit. Given that your business lacks assets and income, lenders will want your personal guarantee on any loans until the assets or income increase. Thus, your personal credit and debt will count.

One thing I would NOT do is pay anyone a fee in advance to find you a lender or investor, no matter how positive they come on as being able to get results.

Your best bet is a relative, or friend. Lenders who are in the lending business have rules, and currently those rules are about as tight as they ever get. If you don't have collateral or a track record in this business or some other business, you don't have much of a chance.

Otherwise, you might try to form a strategic partnership with the exporter.

There are companies that lend on inventory or receivables, but that doesn't get you started; besides, the terms are unfavorable, especially for startups.

You can count on having to guarantee whatever you get personally, and yes they will examine your credit report before agreeing to accept you as a guarantor. Credit-card debt and/or student loans without steady income is a serious negative factor.

Lacking capital, your alternative is just to start out small and grow to the size you'd like to me. Generate your own capital. Keep your day job.

Write a good but realistic business plan. Small-business lenders usually ask for one.

Try the SBA; they have a micro-loan program. Possibly you could qualify but it will require a personal guarantee, like everything else excpet perhaps a family-member loan.